How strange would it be to buy the house two doors down from the house you pulled out of? We had to pull out from the first house purchase due to subsidence issues caused by a tree - supposedly the house two doors down the lane is ok (of course checks need to be done) - but I wonder really how awkward would it be to neighbours to the first set of vendors (assuming of course that they are unable to sell their property in the near future).
Our original buyers pulled out of ours and bought the one over the road. Because of that we ended up with a nightmare chain that dragged on for 6 months with us living opposite them the whole time and me and 2 little DC doing a 45 minute commute twice a day. I tried very hard not to hate them because they were actually nice! I think she felt awkward every time she saw me though.
Even in my darkest, most irrational moments I knew it wasn't their fault - you can't make someone buy a house they don't want! I'm sure it will be fine